Contract handset market helps UK mobile handset sales return to growth

Contract handset market helps UK mobile handset sales return to growth

Smartphone sales are continuing to grow and are predicted to overtake sales of the
standard mobile phone as more customers move onto postpay contracts, according to the latest GfK Retail and Technology UK figures.

The research firm says that the total mobile handset market grew in October to record the largest sales since January 2011. However, it is still showing more than a 10% decline on last year.

GfK attributes the drive behind this increase in sales to the contract market, where October sales grew by over 400,000 units on September. It has shown a year on year increase of between 5% and 10%.

Sim-free has also seen a significant increase since September with sales trebling in October. In contrast, prepay sales are down over 30% on last year, driven by the decline in sales of standard mobile phones.

GfK says the growth in the contract market was seen within both new and retention sales, with retention taking its largest share since July 2010, accounting for over 55% of contract sales. Devices within the Block Touch category drew the largest growth, accounting for over three quarters of all contract sales in October.

QWERTY handsets are also continuing to increase in sales month on month, perhaps as consumers look to try a new style of handset

Looking further into the prepay market, smartphones are still growing, taking over a quarter of sales, with almost 30% year on year growth.

However, GfK says this is outweighed by the rapidly declining standard mobile phone market, which has showed declines of over 40% year on year. It is the sub-£100 handsets that are driving this decline, with year on year declines of over 40%.

Only the £100+ price range, which takes under 20% of the sales, is growing. This growth, however, has slowed in October and is only up less than 5% on last year.

GfK Retail and Technology UK business group director Nigel Catlow said: ‘It will be interesting to see over the next few months whether the prepay market can recover its sales to match last year’s Christmas uplift or whether it is set to continue declining into 2012.

‘An impressive level of 16 million smartphones are likely to be sold in 2011. This, of course, is a double edged sword, in that the drop in sales of portable media players (-40%+) and low-end cameras must be in part a result of the success of the smartphone dominating the consumer’s pocket. It also results in a money shift from traditional CE/Photo retail to Telco retail. It’s clear that this Christmas season is going to be very tough indeed.’

 Joe Fernandez

Written by Mobile Today
Mobile Today


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